Corn prices are plummeting as farmers across the Midwest race to plant this year’s crop.
It is widely expected that 70% of the corn crop will be planted by this weekend, which helped to confirm the market’s expectations for another large harvest of the grain this fall. As a result, prices fell over 20 cents per bushel during the week.
Despite the national pace of corn planting being slightly ahead of schedule, some northern states are lagging behind significantly. As of last Monday, farmers in Michigan, Wisconsin, and Minnesota had only planted half as much corn as usual, as they were slowed down significantly by lingering cold and snow. If these states continue having trouble planting this year’s crop, it could cut into the national production, but few are worried about that prospect yet.
Until this week, corn prices had been supported by high wheat, soybean, and even oat prices but those competing crops took a tumble this week too, because of better outlook for production in South America and the influence of a strong US dollar hurting prospects for US grain exports.
As of Friday morning, corn for delivery in July was trading for $4.81 per bushel.
Although the United States is struggling with a slowly growing economy, the US Federal Reserve is continuing to reduce its economic stimulus levels, showing confidence that the US economy can begin to stand on its own. Across the Atlantic, Europe is heading the other way – economic growth is stagnating, and the European Central Bank is leaning toward a new round of stimulus.
Over the past few weeks, officials from the ECB, including its President Mario Draghi, have indicated that they were ready to deploy new measures to boost the European economy. Currency traders anticipate that these actions would likely be directed at increasing inflation in the euro zone, which would hurt the value of the common currency. As a result, traders have sold their euro holdings aggressively, knocking the currency to an eleven-week low under $1.37 on Thursday.
Longer-term, if economic stimulus helps the European economy recover, the currency may regain its lost ground, especially if its weakest countries can avoid debt crises like those that plagued Greece, Cyprus, and Italy over the past few years.
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